He ruled the streets of Guatemala City with guns and extortion rackets, but Ricardo Paz's real source of power was the white powder he bought every month from the narcos.

The young gang leader considered the narcos to be arrogant, and they considered him crazy, but the relationship worked: cocaine dealing was just too lucrative.

Once a month Paz and some lieutenants would visit "a sort of drug storehouse" to buy about half a kilogramme for 500 quetzals (£156) which they would sell over the following weeks for 1,500 quetzals. "Business doesn't get better than that."

The gang, known as Pandilla 18, had sidelines in extorting bus drivers and businesses, and mugging, but drug dealing was what paid for the guns, the girls and the bribes to police and judges.

Paz may have left school at the age of 11 but he was certainly not stupid. He had risen through gang ranks from being a "chequeo" footsoldier aged 12, to a mid-rank commander in charge of a slum aged 16 and to the leader of his own city zone aged 20. "As boss I had 200 soldiers and was making 10,000 quetzals a week."

His authority hinged partly on ruthlessness. His first murders were of two rival gang members with a shotgun – "and with witnesses, so everyone knew it was me".

Over the years, he said, he killed bus drivers, shop owners, troublesome lovers and five of his own gang members who broke important rules. "Maybe 20 people in total."

His body is covered in tattoos and the face tells a story: a scar on the chin from a broken bottle, another on the cheek from a knife, and premature wrinkles.

Other than violence, Paz's leadership depended on siphoning off some of the cocaine which passed through Guatemala en route from South America to Mexico and the US.

That meant establishing secure supplies from narcos – "Guatemalans, Mexicans, Colombians, all sorts" – despite mutual suspicion. "They didn't trust us or really respect us. They thought we were locos. But we always paid." Paz, who was released from jail two months ago and claims to have abandoned crime, said he respected a code which allowed the narcos' mules to pass through the city untouched but demanded a "quota" when spies tipped him off about big consignments.

Sometimes narcos pay gangs to stage a shootout to distract police, said Gustavo Sifuentes, another former gang leader who now tries to rehabilitate young offenders. "They pay in drugs. It makes sense. Both sides win."